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The $2.8 billion-asset Wilshire would pay about $105 million in cash and stock for the $542 million-asset Saehan, the companies announced Monday.
July 15 -
BBCN said in a press release Tuesday that the acquisition would position the $5.6 billion-asset company as "the leading Korean-American bank in Chicago" while providing it with entry into the Washington, D.C., market.
April 16 -
After spending recent years repairing its balance sheet, Hanmi Financial (HAFC) is again looking to grow. To do so, it's eyeing markets that Korean-American lenders have traditionally neglected.
June 12 -
BBCN execs took a difficult path to build the largest Korean-American bank, but a successful merger in L.A. and a deal in Seattle have put it on course to become a West Coast player — and maybe more.
December 26 -
Saehan Bancorp in Los Angeles has reported a profit in two straight quarters after losing more than $75 million in 2009 and 2010.
August 16
Wilshire Bancorp's deal in Los Angeles last week could kick the consolidation of Korean-American banks into high gear.
There have been four deals in the niche sector since October a substantial number considering there are less than two dozen Korean-American banks.
BBCN Bancorp (BBCN) and Wilshire (WIBC) two of the largest Korean-American banks have been the buyers. Wilshire made it two deals apiece when it
Moreover, Wilshire's eye-catching promise of 60% cost savings could inspire even more deals in Korean-American communities across the country.
"If Wilshire can prove they can actually get 60% cost savings without damaging the business reputation, we could see a real acceleration in deal activity," says Tim Coffey, an analyst at FIG Partners. "This is a real in-market deal with some real meat in the cost savings."
Cost savings are often the trickiest part of deals between two banks in the same market, and analysts say that is especially true of deals among Asian-American banks.
The 2011 merger between Center Financial and Nara Bancorp, which created
"I'm a little surprised to see how blunt Wilshire was in its cost saves," Balicka says. "They were up front and weren't dancing around this still sensitive issue."
Eight of Saehan's 10 branches are within a mile of a Wilshire location, Wilshire said. However,
that doesn't mean all of those redundancies will be eliminated, cautioned Alex Ko, the chief financial officer of Wilshire.
"It is true that distance-wise, there is overlap, but that doesn't mean we are closing eight out of 10. It might be the Wilshire branch that closes," Ko says. "But even if they are across the street if the customer need is there, we will keep them both."
Saehan, which narrowly escaped failure with an eleventh-hour recapitalization deal in early 2010, has shrunk its assets 36% since the end of 2008 to $542 million.
In seeking cost cuts, Wilshire will try to avoid jeopardizing the work that Saehan had done over the last few years to survive, Ko says.
"Saehan at one time was nearly $1 billion in assets; now they are half of that," Ko says. "Their core key employees are there, and so are the customers. We are sensitive on that regard. It is not unique to Korean-American banks."
Besides the cost savings, Ko says he is excited about the deal's potential to add revenue. For example, Wilshire could offer Saehan customers more expertise in Small Business Administration loans.
The pairing, even if the pace of revenue held steady, is expected to be 10.3% accretive to earnings in 2015 and Wilshire is expecting 4.1% tangible book value dilution that would be earned back over 3.1 years.
Following Saehan's recapitalization and subsequent recovery, it has been poised to be acquired, analysts say. Last year Hana Financial Group, in Seoul, South Korea, attempted to take a majority stake, but the deal quickly collapsed.
"Wilshire is the winner; everyone wanted this franchise," Ko says. "The revenue growth is substantial. They have gone through a difficult credit cycle and are much better, and it is a great franchise to add on to Wilshire for further growth."
The deal follows Wilshire
The market has welcomed Wilshire's dealmaking. With the stock trading at $8.47 on Monday, it has risen 25% since June 7 the day before it announced its deal for BankAsiana.
It has been the subject of additional M&A speculation.
Wilshire was considered the frontrunner to buy Hanmi Financial (HAFC), another onetime struggler that has rebounded. At $2.4 billion in assets, Hanmi would have put Wilshire on par with the $5.8 billion-asset
Although
"Hanmi can't be left behind it can't stay the same size," Coffey says.